Medicare 101

What does Medicare Part D Prescription drug coverage cover?

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Medicare Part D (prescription drug coverage) is available to everyone with Medicare. If you opt for a Medicare Advantage (HMO) plan, the drug plan will usually be included. If you go with a Medicare Supplement plan, you will simply select a Prescription Drug Plan that best suits your prescription drugs.

Each plan can vary in cost per pharmacy and specific drugs covered. Medicare Prescription Drug Plans are required to cover all of the major categories of drugs, but each plan may choose which specific drugs it covers. The drugs you take may not be covered by every Part D plan; therefore, the best idea is to review each plan’s drug list, or formulary, to see if your drugs are covered. Enroll Hero can do this calculation for you in seconds, if you want to save a few hours.

Late Enrollment Penalty
If you decide not to join a Medicare drug plan when you’re first eligible usually during your Initial Enrollment Period, and you don’t have other creditable prescription drug coverage or Extra Help, you’ll likely pay a late enrollment penalty of 1% per month you are not enrolled. This penalty acts like a surcharge on your monthly Part D premiums for as long as you have Medicare drug coverage.

How much does it cost?
There are some key considerations on cost that you should consider:

  1. Monthly Premiums – the amount you pay each month for the plan. Most HMO plans include the drug plan and you would not pay anything additional.
  2. Annual Deductible – In 2018, this can range from $0 to $405.
  3. Co-pays – You may have to pay for each prescription drug refill depending upon the drug and pharmacy.
  4. Co-insurance – For more expensive brand drugs, you will need to pay a percentage of the cost of the drug.

Coverage Levels
There are 4 levels of coverage that is determined by adding up the retail cost of your prescription drugs. These levels of coverage are what correspond with what you pay for your refills.

  1. Deductible Level (up to $405) – Prior to you reaching your annual deductible amount.
  2. Initial Coverage (up to $3,750) – This is when your drug coverage kicks in and usually results in lower pricing.
  3. Coverage Gap aka Donut Hole (from $3,750 to $5,000) – This goes away in 2020 and has a strange political history, but during this coverage gap level, you may see your prices increase.
  4. Catastrophic (over $5,000) – Your drug prices will decrease to $3.35 for generics and  the greater of $8.35 or 5% for brand name drugs.

Our take
The world of Medicare drug plans is highly complex and extremely opaque for many reasons, including political lobbying. As it stands, we think it has the highest potential of causing financial distress, and is therefore the most important to optimize. It is vital that you do your plan comparisons for your specific drugs every year. Each drug has a different formulary and pricing per drug per pharmacy. A higher monthly premium does not equate to better pricing. Also bear in mind that each plan has preferred pharmacies like CVS or Walgreens, and you would save money by going to these. Most plans also have mail order that can provide 3-month supplies and slightly lower costs.

Does it cover Viagra or Cialis?
Only for medically necessary conditions like enlarged prostate, not for ED or for fun.

Have any questions?
Just get in touch with one of our Heroes that would be happy to help you! We are unbiased independent brokers contracted with all of the major health insurance companies. We are 100% free to you and the prices are the same as if you went directly to the health insurance companies, but with us as your Medicare concierge we can continue to guide you in your journey.

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